In the process of thinking through what kind of business I might like to start for myself, I chose to start with a survey conducted by RSW/US, a ‘matchmaking’ company that brings clients and advertising agencies together.
As usual, satisfaction with current agency ratings are quite low, at about 41 percent, and nearly half wouldn’t ask their current agency back in a review. Clients don’t believe traditional full service agencies have the expertise to deliver great digital ideas; but they’d rather give their business to a full-service shop.
It’s the following two charts in the report that are the most illuminating:
Right time-right place, recommendations, and just ‘fitting the bill’ – being the right kind of agency – are the most influential factors for clients selecting agencies. Awards, search, trade associations, matchmakers – these are minor considerations for clients. They want to have heard good things about you, and see you on their doorstep when they need you.
So why do they change agencies?
The biggest issues that lead a client to put the account in review are about their perception of the quality of the work: either the strategy isn’t there, or the creative isn’t. In my mind, I’d combine “Lack of proactivity” and “Worsening relationships with agency team” because they both seem to be essentially about perceptions of service – together these would come in to tie at second place. Costs are in a distant fourth place.
If clients put their business into review because the work wasn’t up to expectations, this puts the offending agency at risk for future business, since so much hinges on word of mouth. So I spent a great deal of time this morning and afternoon thinking through the main categories of dissatisfaction, and matching those against the chief complaints I’ve heard working with or for advertising agencies about clients. There’s a rather shocking alignment of concerns that express themselves as a kind of he says-she says account of the apparently worsening relationship between agencies and their clients.
This is step one in a process – my intention is to spend some time over the next few months examining what a Lean advertising agency would be like, perhaps even for a book (!). I’m curious about where clients see the value coming from in what agencies are, or should be, offering. I’m equally curious about testing the belief that while you might be able to build cars in a lean way, you can’t make a TV commercial using lean principles. But today we’re going to just start by looking at the problems.
Talk to any venture capitalist or start-up founder – they’ll spend a fair amount of time describing the importance of product-market fit. This isn’t about changing the product to fit the market, or even changing the market to fit the product – though it could ultimately lead to either outcome – but rather about positioning the product in a way that demonstrates value to the potential market. There are a lot of start-ups that fail not because they’ve made a bad product or because there is no natural market for their product – but because they haven’t clearly and compellingly articulated why that market might want or need the product.
It seems that agencies are facing a challenge in this regard as well. Over the hundred or so years that advertising agencies have existed, the mission has become rather fuzzy. At the outset the role of an advertising agent was to purchase advertising space on billboards or in newspapers or magazines on behalf of businesses.
After awhile, customers started asking for more: ideas about how to produce advertising that stood out and increased sales. The agent, not wanting to lose a good customer, hired a typesetter and an illustrator, maybe wrote the ad copy himself or hired someone to write it for him. He called up his contact in the publisher’s office of the newspaper and this time sent over an ad along with the money for the placement.
The agent became an agency. The customer became a client – he’d be back, because the agency knew how to get this kind of work done.
And this is how advertising has evolved, as an industry of agents designing, producing and placing advertising on behalf of the client.
What the client used to want? An advertisement that drove sales. Send us five cents and we’ll send you a Sunkist juicer so you can make juice out of Sunkist oranges. Write to this address for a complete Sears catalog of all our tools and parts. Visit this Ford Motor showroom to test drive a new car.
But the market changed. It became more complicated – more brands, more media, more channels. It seemed you had to spend more and more to see that sales curve lift. It became a kind of arms race between brands to see who could reach the most people.
Clients still want to see the sales curve go up. Read the feedback at the end of the report and you’ll see a lot of concern with ROI, effectiveness, sales and volume increasing, business results, and so on. But unlike those early days when the guy with a few dollars in his pocket to place an ad in the Gazette sold more widgets than the other guy who hadn’t thought to, the ability to track results against communications activities has become diffuse. A campaign lives in simply too many channels; the drive for differentiation now means that there might be no direct, trackable call to action; other economic factors (pricing, distribution, competition, etc.) cause signal interference for brands that advertise widely, sell multiple product lines, distribute through multiple sales channels, and face many competitors.
But clients don’t feel sympathetic towards advertising agencies for having to muddle alongside them through all this complexity. Increasingly, this survey suggests, clients feel a great deal of disappointment and bitterness about the failure of their agencies to clarify and simplify the complexity, while still bringing home those obvious, measurable results.
“What do you want from me? Fine writing? Or do you want to see the goddamned sales curve stop moving down and start moving up?” — Rosser Reeves
Looking through the complaints I jotted on post-its as I read through this report and the complaints I heard working with and for agencies, I noticed that a lot of the problem seemed to rest under a few overarching concepts.
Clients complain that agencies don’t think or act strategically enough, that they don’t come to clients with a case about how the proposed approach will help them gain market share, increase volume, or otherwise steal sales from their competitors. They complain that agencies don’t know their consumers, their market, their competitors, their sales and distribution channels.
Agencies complain that sales numbers and ROI are all that clients think about – they don’t ‘get’ marketing, they don’t appreciate the concept of building a brand. They complain that the client’s goal or definition of ROI is unrealistic. They complain that clients are not transparent about their business objectives, that they don’t engage agencies as partners, or include them in future plans. They believe that clients sometimes perceive themselves as competing against the wrong people, or that they want to target the wrong consumers.
Transparency & Accountability
Clients complain that agencies are bad at strategy and analytics. They believe that agencies lack the competence to effectively measure the results of what they produce, or worse, conceal those results from the clients. They want more accountability from agencies – for agencies to follow-up on the results of a campaign, and to report these results to the client. And they want these results to be tangible – sales, volume, measurable ROI. I’ve had some clients who’ve wished that the agency could offer a theory about what success would look like if it isn’t going to be sales or volume or share price.
Agencies on the other hand, feel that there is more to advertising than analytics, or feel that campaign measurement is more complicated and nuanced than mere sales figures. Agencies often feel that the work of planning and account management – where this strategy and analytics would likely be managed – are under-valued by clients, who care (they believe) only about the creative and the costs. Often, agencies feel they are provided with instructions from a brand manager or CMO that are unrelated to the company’s business goals. They worry that clients test ideas to destruction, that they make their goals moving targets, that they aren’t transparent about their actual business goals, and that they don’t give credit to agencies when they do have a successful campaign.
Clients say they want – but do not get – enough new, fresh, innovative ideas from their agencies. They say that they are often not happy with the creative output. They say traditional agencies lack digital skills.
Agencies say clients lack taste and sophistication, are scared of new ideas, are overwhelmed by fresh or innovative technologies, don’t ‘get’ digital/social/mobile, and prefer the safe, me-too route. Those who do ‘care’ about creativity are just in it for the awards or the chance to rub shoulders with celebrities.
Trust & Service
Clients complain they don’t feel agencies listen to them, they don’t get enough attention, they get pawned off on junior team members. They complain agencies do not bring them unsolicited ideas; they don’t bring enough ideas; they don’t bring fully realized ideas - overarching strategies with executions for each of the channels. They complain that agencies set themselves apart and above the internal client marketing team; that they do not recognize the capabilities, talent and expertise that clients have about their own business and market. They complain about being condescended to.
Agencies complain that clients are not loyal – that they lost business to other agencies or competitors without getting a shot at it first. They complain that clients don’t trust them – that they don’t share information, or set up ‘gotcha’ scenarios where the agency is being tested rather than engaged in a collaborative way. They complain that when multiple agencies are used on a single campaign, the client plays favorites, undermines some players, elevates others. They complain that clients are not responsive to requests for feedback or approval, that they unnecessarily delay signing off on scope of work agreements. And they complain that clients can be abusive to some members of the team.
Costs & Capabilities
Clients complain that agencies nickel & dime them for basic service that should just be ‘included’ in the project – for advice, revisions, or projections. They complain that agencies are bad at projecting costs and managing them throughout the lifetime of the project. They complain that agencies can’t tell them what the results based on spend will be. And they complain that agencies can not do everything well, or respond nimbly to their changing needs. They want a more innovative full service model. Clients don’t actually want multiple agencies – they want one agency to handle all of this on their behalf, to coordinate the production and placement and management of an integrated campaign for them.
Agencies say that clients want more and more work for free – work that is outside of the agreed-to scope of work. They say that clients don’t pay enough (in that commission on placement and production structure that most agencies still use), or negotiate them down on the agency fee for coordinating and managing the campaign, thereby making every additional request from the client an opportunity to lose money on the project. They say that clients lack the internal structure to implement or manage the approval process for integrated campaigns. They say that clients start with one budget, set goals and KPIs off that budget, and then cut once the project is approved – but still expect the same ROI as the higher spend. They say that they are the last to know when the client’s needs change. And they say that the era of the big account or project seems to be waning – that it’s tough to find a true ‘full service’ piece of business these days.
What’s it all mean?
It’s pretty simple, when you look at the complaints all lined up on a wall, as I did today. Clients have business needs, challenges, and goals. They try to solve for these through advertising. They believe, however, that agencies are poorly equipped to help them achieve any of these goals or surmount any of these challenges. So the two have become antagonists. – people who do not trust each other.
I think the real culprit is procedural. Sales and marketing may not be sharing goals with one another. Marketing may not be incentivized by sales goals. Marketing commissions advertising based on what some in the Lean Startup movement call ‘vanity metrics’ – likability or brand perceptions or awards.
Advertising agencies aren’t paid to become experts on the client’s business, so they become experts on advertising. They don’t have the time or the relationships to go deep on the structure of the market; they aren’t rewarded for challenging the client’s assumptions. They don’t have access to the right people in the client teams for the information they need to make the best recommendations and the best work. They don’t have the budgets to get that information on their own.
“Good” advertising doesn’t have a clear call to action, isn’t direct marketing – it’s lifestyle based, taps into hidden desires or unspoken needs, creates cultural icons or foments generational movements. They fear research as a sure-fire path to killing their creative darlings. They limit their financial exposure by bringing fewer ideas to the table. They defend them fiercely, even at the risk of seeming condescending, because it is the only asset they feel they have.
And because they fear research, and lack the client’s willingness to invest in it, they do not gather data on the efficacy of a campaign, or do not gather the best data, and therefore, do not learn from one campaign how to make the next one better. But then, often, neither does the client.
In the end, relationships falter because of hurt feelings, unmet needs, disappointment, and an erosion of trust. These come from a misalignment of expectations with capabilities.
It’s hard to say for certain who is in the wrong here – are clients asking ad agencies to solve problems they can’t solve? Or have agencies intertwined themselves too tightly with the services they provided as agents, and not the outcomes those services were used to create? In other words were clients buying something agencies didn’t fully realize they were selling? Is what clients want from ad agencies not really advertising, per se, but increased revenue, sales volume, or market share? And in today’s complicated world, is advertising always part of the solution set?
It seems to me the fundamental problem is that advertising agencies have thought, this whole time, that they were in the business of selling access to the development and placement of advertising, while their clients were trying to buy increased sales.
Perhaps clients don’t really need advertising agencies anymore (though they will still need creative production and media placement/negotiation). Maybe they need business-model-seeking agencies that create roadmaps to carry out consumer, product, channel and marketing strategies. Maybe those agencies facilitate the creation of assets that are placed into those channels or campaigns on behalf of their clients. Maybe they are paid to be trusted experts who guide clients through the ever-evolving landscape of their market.